Rob Lee

Russia's Tight Money Stifles Growth Amid War‑Driven Inflation

“Russia’s tight monetary policy has landed it in an unlikely club of countries usually comprised of economies battling debt distress or runaway inflation, laying bare the economic costs from the war in Ukraine beyond the swelling military-spending bill… The sheer scale of defense spending is a direct threat to price stability. Had the central bank ignored inflation, it could have reached as much as 30% last year, Governor Elvira Nabiullina told lawmakers last month… Though the bank has been cutting its key rate for nine months, lowering it to 15% at its last meeting, little of that easing has filtered through to businesses or the broader economy. Real borrowing costs remain near historic highs, exceeding 9%. In March, annual price growth stood at 5.9%, according to Economy Ministry data published late Friday. The cost of money now dominates economic debates, public forums and closed-door meetings. If current trends persist, growth could slow to zero and investment could fall more than expected, Alexander Shokhin, head of the Russian Union of Industrialists and Entrepreneurs, told reporters earlier this month, according to the Interfax news service.” https://t.co/LBc82mwpOM